The Canadian dollar will sink as low as 69 U.S. cents with little to drive the economy after oil's collapse, according to Macquarie Group Ltd, joining a growing list of forecasters lowering their projections.
Macquarie forecast Monday the currency would reach a bottom near 69 U.S. cents. Royal Bank of Canada and Credit Suisse Group AG last week lowered their forecasts to 75 cents. HSBC Holdings Plc is calling for a 74 cent Canadian dollar. Morgan Stanley sees the loonie dropping to 71 U.S. cents by next year.
"There's going to need to be even more Canadian dollar weakness than people expect because of the significant loss of competitiveness," Evan Brown, an analyst with Morgan Stanley, said by phone from New York.
With consumer debt loads at a record high, manufacturing hobbled by the surge in the loonie to parity with its U.S. peer in the past decade and energy producers cutting investment and jobs, there are few growth drivers left in the economy, analysts say. Employment in manufacturing remains near the record low it reached during the 2009 recession, far from a peak in 2002, when the currency bottomed last time.
The loonie, as the currency is known, has dropped 26 percent to C$1.2583 per U.S. dollar, or 79 U.S. cents, in the past two years.
"What we're left with is now the re-balancing of the economy falls even more on non-energy exports as almost the single prop," David Watt, Toronto-based chief economist at HSBC's Canadian unit, said in a telephone interview. "It basically means the Canadian dollar is going to have to do more to carry the burden of adjustment."
The cascade of forecast revisions comes after the Bank of Canada unexpectedly cut interest rates last month, calling it insurance against a slump in crude oil prices, the country's largest export. The central bank had been counting on export- driven business investment to spur growth.
A declining currency makes a country's exports cheaper abroad.
"The oil story was always a key factor behind that re- balancing," said HSBC's Watt. "Now one of the sectors that would have been carrying that burden of adjustment has abandoned ship.
So on a 400000 combine it will now cost canadian farmers $128,000. more. That's easy their are lots of used out on dealer lots so sales will drop on new. But this also again gives the American farmer a real advantage at Richie Bros where they are buying equipment at a Discount. So used should stabilize.
Fert, chem, Seed etc will all sky Rocket again. Since all are based on USA prices.
Travel to USA is going to get tougher, Shopping trips now have no advantage prices are higher once exchange is added.
Tires add-ons etc. are all higher now.
Purchasing of property in USA has just hit a snag and its a big snag. That 200000 condo that you looked at in November and wanted is now going to be $264000.00.
Your trucks for farm will not be 75000 they will approach 98000.
USA investors and other countries can now move to land grab number three with a low dollar they are getting a real nice discount.
So the negatives for Agriculture are huge and farms have to adjust because these costs will effect your farm huge.
Plus side is sales of our product. Ouch I bite my cheek.
Basis is criminal this winter but maybe maybe by next fall it will get some where close to reflecting our dollar.
A 4.50 Hrs price on Min could net you $6.27.
Locking in a basis for fall might not be a good thing. What seems good today could be awful come fall. But your booking movement in reality.
Future price with no basis?
Any thoughts on the new world of real low Canadian Dollar.
Adjust the sales (Sails) boys the Wind just did a 180 and its going to get ugly their is a 100 ft wave approaching.
Macquarie forecast Monday the currency would reach a bottom near 69 U.S. cents. Royal Bank of Canada and Credit Suisse Group AG last week lowered their forecasts to 75 cents. HSBC Holdings Plc is calling for a 74 cent Canadian dollar. Morgan Stanley sees the loonie dropping to 71 U.S. cents by next year.
"There's going to need to be even more Canadian dollar weakness than people expect because of the significant loss of competitiveness," Evan Brown, an analyst with Morgan Stanley, said by phone from New York.
With consumer debt loads at a record high, manufacturing hobbled by the surge in the loonie to parity with its U.S. peer in the past decade and energy producers cutting investment and jobs, there are few growth drivers left in the economy, analysts say. Employment in manufacturing remains near the record low it reached during the 2009 recession, far from a peak in 2002, when the currency bottomed last time.
The loonie, as the currency is known, has dropped 26 percent to C$1.2583 per U.S. dollar, or 79 U.S. cents, in the past two years.
"What we're left with is now the re-balancing of the economy falls even more on non-energy exports as almost the single prop," David Watt, Toronto-based chief economist at HSBC's Canadian unit, said in a telephone interview. "It basically means the Canadian dollar is going to have to do more to carry the burden of adjustment."
The cascade of forecast revisions comes after the Bank of Canada unexpectedly cut interest rates last month, calling it insurance against a slump in crude oil prices, the country's largest export. The central bank had been counting on export- driven business investment to spur growth.
A declining currency makes a country's exports cheaper abroad.
"The oil story was always a key factor behind that re- balancing," said HSBC's Watt. "Now one of the sectors that would have been carrying that burden of adjustment has abandoned ship.
So on a 400000 combine it will now cost canadian farmers $128,000. more. That's easy their are lots of used out on dealer lots so sales will drop on new. But this also again gives the American farmer a real advantage at Richie Bros where they are buying equipment at a Discount. So used should stabilize.
Fert, chem, Seed etc will all sky Rocket again. Since all are based on USA prices.
Travel to USA is going to get tougher, Shopping trips now have no advantage prices are higher once exchange is added.
Tires add-ons etc. are all higher now.
Purchasing of property in USA has just hit a snag and its a big snag. That 200000 condo that you looked at in November and wanted is now going to be $264000.00.
Your trucks for farm will not be 75000 they will approach 98000.
USA investors and other countries can now move to land grab number three with a low dollar they are getting a real nice discount.
So the negatives for Agriculture are huge and farms have to adjust because these costs will effect your farm huge.
Plus side is sales of our product. Ouch I bite my cheek.
Basis is criminal this winter but maybe maybe by next fall it will get some where close to reflecting our dollar.
A 4.50 Hrs price on Min could net you $6.27.
Locking in a basis for fall might not be a good thing. What seems good today could be awful come fall. But your booking movement in reality.
Future price with no basis?
Any thoughts on the new world of real low Canadian Dollar.
Adjust the sales (Sails) boys the Wind just did a 180 and its going to get ugly their is a 100 ft wave approaching.
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